AT 90 years old, this senior was my oldest client. Everything came crashing down on him during his golden years, unfortunately. He had a business, which looked like it never made money but he kept on doing the business just because it gave him something to do every day.
So, he had $34,000 in credit cards, and $16,000 repo deficiency for the total unsecured debt of $50,000. That’s a significant amount of debt when you’re 90. He was receiving about $2,000 a month with social security a pension but had already sold his house with zero net proceeds two years ago. He has three adult children who are gainfully employed but he just wanted to live by himself, and I guess his three children pretty much left him alone. He was married twice and divorced twice and was already single.
His ex-second wife offered to let him live with her in her house. She still loves him. For unknown reasons, ex-wife no. 2 put him on a title to her house! Oops. Her house already has a very large equity, more than $500,000. She has her own adult children with her first husband. She had no financial problems until he moved in with her. I won’t go into details but she ended up losing $300,000 of her 401K. The two of them believed a scammer that promised a $10 million pot of gold at the end of the rainbow, if only they forked over $300,000. Wow, what a deal of deals — for $300K, you get $10 million! Let’s not get into that right now. Suffice it to say that if it’s too good to be true, then it’s not true. When someone gives you this kind of proposal where you have to give money upfront to get a big windfall, just walk away and just don’t think about it again. It’s a scam.
For example, for the senior ladies, if you suddenly meet a guy overseas who wants to marry you and he says that he’s some white dude who is the second cousin of the queen of England, and he sends you a picture of a white dude who looks like Tom Cruise in full military uniform of the British Royal Air Force, better hold on tight to your money in the bank! The fool and her money will soon be parted. If you actually use up your credit cards to send him $50,000, come see me for a Chapter 7 or Chapter 13, okay? You are never going to see your prince charming, and you are never going to see your $50,000 again, not in this lifetime.
Putting the senior client on the title to her house was a big mistake because instead of being able to file for Chapter 7 relief, he can only qualify for Chapter 13 to handle the $50K of debt. We could have done his Chapter 7 first and wiped out the $50,000, and then if she still wanted to, she could put his name on the title six months after the Chapter 7 discharge date.
But she put him on the title as soon as he moved in with her. That fact changes the whole ball game in terms of getting the appropriate bankruptcy relief. When he came to see me the first time, I knew the $50,000 really irritated him to no end, even complaining why he would owe $16,000 of repo deficiency when the car has been returned to the creditor. Sorry, that’s the way contract law works. I can’t blame him for being stressed out. Who wants to have to pay $50,000 of debt at the age of 90? Nobody I know wants this kind of financial stress at any age; what more when you’re already 90 and you don’t know how much longer you have on this earth?
The client then got sick with liver cancer and was given only a year to live. The court confirmed his Chapter 13 case last week. Right after his case was confirmed, the client passed away. Rest in peace and I am sure he is happy now in heaven with God the Father, God the Son, Jesus Christ, and God the Holy Spirit.
So what happens to his Chapter 13 case, and more interestingly, what happens to his ex-wife’s house that has his name on it? And what happens to all of the $50,000 unsecured debt that he was going to pay through Chapter 13? We will discuss this at a later date.
It’s really better to get rid of your debts sooner than later. Don’t wait too long. If you can qualify now for Chapter 7, just do it now. It’s harder all around if you wait until you’re 80. The spirit is willing but the body is literally too weak at 80. I have another senior client who was only 74 but on dialysis. He also passed away late last year just when the virus began to rear its ugly head. In his case, his joint debtor widow continued the plan payments. She moved in with her son and just rented out their house. It had a default of about $30,000. That was the reason for Chapter 13: to save the house from foreclosure. It was the right move, because the equity is now about $200,000 and she now gets rental income from it, which is net positive after mortgage payment. For her, things worked out. Her son asked her to move in with him and his wife and family, and she was able to keep her house from foreclosure and benefit significantly from the increase in equity. But of course, although there was that risk of dying, her husband was on the waiting list for a kidney transplant. The husband had a major heart attack at night before they went to sleep. It was too late when the paramedics arrived, he was gone.
My classmate is still in a coma two months after being infected with the virus. He is still on a ventilator and has suffered multiple mini strokes. We are praying for a miracle to get him back fully recovered and conscious again. “Ask and it will be given.” “Knock and the door will open.” If it is God’s will, he will bless my friend with a miracle of full recovery. His wife and family still need him.
Businessowner with several restaurants needs Chapter 7 relief
The next client is only 50. Believe me, that is young. He owns three restaurants. He sold one recently, but one of his former employees filed a lawsuit for unpaid overtime of several years. He wants to close the 2nd restaurant that is no longer profitable because of the lockdown. The problem is that he personally is on the commercial lease at $7,000 a month for five more years. So he’s on the hook for $500,000 of unpaid rent. His third restaurant is still doing ok despite the lockdown. He wants to keep that restaurant. So, this is not unusual nowadays with the pandemic still untamed here in our beautiful country. This client needs Chapter 7 relief for a fresh start with no debt but with the ability to continue operating the third restaurant.
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Disclaimer: None of the foregoing is considered legal advice. Each case is different.
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Lawrence Bautista Yang specializes in Bankruptcy, Business, Real Estate and Civil Litigation and has successfully represented more than five thousand clients in California. Please call Angie, Barbara or Jess at (626) 284-1142 for an appointment at 20274 Carrey Road, Walnut, CA 91789 or 1000 S. Fremont Ave., Mailstop 58, Building A-10 South, Suite 10042, Alhambra, CA 91803.